Two years after the state agreed to pay off the hundreds of millions of dollars owed to hospitals for Medicaid patients – and a year after it began to make payments – the state’s debt is still accumulating.

Some hospitals say they’re owed more now than before.

“We figure it’s (accruing) about $10 a minute,” said Joe Wood, finance director for St. Mary’s Regional Medical Center in Lewiston.

In 2006, state and federal governments owed Maine hospitals about $330 million for services provided to patients with Medicaid, the government’s health insurance program for the poor. The state was responsible for about one third of the debt and the federal government owed about two-thirds, but hospitals could not get the federal payments until the state first paid its share. The debt went back years.

Gov. John Baldacci agreed to pay off the state’s share of the Medicaid bills, $122 million, over four years. The payments began last year and were slated to go through fiscal year 2011.

The governor also agreed to increase future payments so the state wouldn’t find itself in debt to the hospitals again.

Those future payments haven’t been enough.

For fiscal year 2009, for example, the state projected hospitals’ Medicaid costs would reach $472 million. They will actually reach about $540 million.

“The gap continues,” said Brenda Harvey, commissioner of the Department of Health and Human Services, which oversees Medicaid in Maine. “Perhaps at a lesser pace, but the gap continues.”

Although many hospital officials say they applaud the governor for setting up – and sticking to – a payment schedule, they worry about the debt that continues to accrue.

“There is no answer in sight to catch the hospitals up to fully what is owed,” said Richard Batt, president of Franklin Memorial Hospital in Farmington.

He said his hospital is owed nearly as much as it was in 2006, despite receiving a few million dollars in back payments.

“For us, it grows every day,” Batt said.

Franklin Memorial is suing the state in state and federal courts. It wants Maine to pay its debts in full and not accrue any more.

Many hospitals have taken out lines of credit, according to the Maine Hospital Association. Others have put off buying new equipment or making other improvements.

“We’ve got severe cash problems in Maine hospitals,” said Steven Michaud, president of the Maine Hospital Association.

He has faith the government will pay what it owes, but for right now, he said, the debt “is a huge deal.”

The state, however, points out that Medicaid money accounts for, on average, 12 to 15 percent of a hospital’s revenue.

“If the other 85 percent (of revenue) is coming in as expected, then one might ask, ‘Is it reasonable that there’s a hardship here?'” Harvey said.

Still, the state is working on ways to lessen future debt, most notably by changing the way it calculates payments so there is less estimation involved and by finding primary care doctors for Medicaid patients so they don’t have to use the hospital emergency room for routine care.

The debt has accumulated, in part, because more Medicaid patients are using hospitals than the state expected. Medicaid, also known as MaineCare, insures about 273,000 people in Maine.

“We have been chipping away at that (debt) in major chunks. Yet the same message seems to come across to the public in that we owe the hospitals all this money and we’re not doing anything about it. That’s not my perspective whatsoever,” Harvey said.

“And in the climate of having to decide what programs we cut and paying hospitals their debt, I understand the liability is a first priority, but Maine citizens need to continue to get services, too.”

Estimated amounts of MaineCare money the state owes to hospitals for fiscal years 2005-08:

• Central Maine Medical Center, Lewiston: $68 million

• Franklin Memorial Hospital, Farmington: $25.5 million

• St. Mary’s Regional Medical Center, Lewiston: $12.3 million

• Stephens Memorial Hospital, Norway: $7.4 million

• Bridgton Hospital: $7.3 million

• Rumford Hospital: $1.6 million

Source: Maine Department of Health and Human Services